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What are the hidden costs with a VoIP phone system?

We explain the fees & hidden costs with VoIP phone systems.

Whenever you switch into a new contract, regardless of whether it’s for a smartphone, car, or a home, people can have some reservations about the unknown. Things hidden in the fine print, the unwritten rules they’ll have to follow, and worst of all, hidden costs.

When it comes to VoIP phone systems, that’s true as well. We’ve found over the years that a lot of folks want to know the entirety of the cost up front, and specifically they want to know what are the hidden costs with a VoIP phone system. Makes sense, doesn’t it? If you’re making sure a new phone system fits into your budget, you’re going to need to know where every cent is going, and what you’re really paying for.

Fortunately, addressing the hidden costs with a VoIP phone system is a relatively easy thing to do. Since “hidden fees” can be tied directly to easily identifiable parts of your phone bill, it’s simple to explain what you’re paying for, above and beyond your normal VoIP costs.

Hidden fees with VoIP phone systems.

While these aren’t necessarily hidden, since they’re easy to see in each bill you’ll receive, these hidden fees can be confusing the first time you see them. Bear in mind, most of these charges are out of the control of your VoIP provider, and are set by either local, state, or federal regulations.

But rest easy, and let’s go over some of the hidden fee’s you’d normally see in a monthly bill for your VoIP service.

Hidden Costs with VoIP Phone Systems

 

E911 Fees

E911 fees are charged to you by the state & local government to help fund emergency response services. E911, short for Enhanced 911, is a type of support for mobile & VoIP phone systems. Since VoIP works over the internet, and mobile phones are well, mobile, an enhanced version of 911 was necessary to ensure that emergency responders can get to people accurately. Hence, E911!

These fees are normally in the $0.20 to $2.00 range, and can depend on your location. For example, in New Jersey E911 fees are usually around $0.90 per service line, while in New York, E911 fees can cost around $0.35 per service line.

USF Fees

Another acronym, another fee. USF is short for Universal Service fee, a cost associated with the Federal Communications Commission also known as the FCC. This fee is designed to provide financial support to help fund programs & initiatives for health care facilities, schools, libraries, and other various public services to have access to telecommunication services.

They are based on a percentage of your phone bill and may vary each quarter. We traditionally see USF Fees range anywhere from 5% to 15% of your bill.

State & Local Taxes

Of course there’s taxes! This is New Jersey, where’s there’s tax for everything, and when it comes to VoIP service, it’s no different. Taxes vary by state to state, and local jurisdictions play a role as well.

We normally see taxes ranging in the 3.5% to 8.5% range depending on your state, which includes both state & local taxes.

Early Termination Fee (ETF)

This is a fee you can 100% control! If you contract is up and you’ve completely cut ties (including financially) with your current provider, you most likely won’t have this fee. If you’re still under contract and looking to get out early, then this applies to you.

The best part is all it takes is a call to your current service provider to find out what this fee will be.

The other best part is this is a one-time fee. You can pay the ETF and move on. It’s sort of the fee to break up with your current telephone provider.

Early termination fees are charged to you by your current telephone service provider for leaving your contract early, and can be very costly, depending on the remaining life of your contract.

To avoid these fees, we recommend that before looking into a getting VoIP phone service, you contact your current telephone service provider to go over details of your existing contract with them and what your early termination fees will be.

Another option is for you, the customer, to request from the new service provider that they find out the accurate early termination fee and determine if this can be negotiated. It’s something we do here on behalf of our clients fairly frequently in order to help ease the transition from one provider to another.

While an early termination fee can vary depending on how much time is left in your contract, we usually see fees assessed anywhere from $1,000 to $10,000 depending on how many lines you have and how many months are left on your contract.

LNP Charges

This is a one time-fee that you might see only once. It’s typically your first invoice with your new service provider. Again, the best part with this fee is it occurs once!

Local Number Portability fees are charged to the customers for porting their phone numbers from their current service provider to a new service provider. We go over the details about porting phone lines to VoIP systems in that link to explain the process more in-depth.

LNP fees can be charged for the porting of your phone numbers, fax lines and toll free phone numbers and can vary in cost, but generally run anywhere between $10.00 and $20.00 per line being ported over.

Toll Free Phone Number Fees

Most customers aren’t aware they get charged for incoming Toll Free calls. The reality is these told free calls you’re receiving are costing more than just your time!

Calls are charged on a per minute basis and the rate really depends on your telephone service provider, but we usually see rates between $0.20 and $0.55 per minute.

Support and Ongoing Services Fees

Last but not least, there can be a charge on your VoIP bill for “support services”. Even if you haven’t explicitly signed up for a robust support package, you may still need to pay support fees for your VoIP service.

Support services can be a huge umbrella that encompass, ranging from remote support to on-site labor to warranties on hardware.

This is something you can generally get pretty clear clarification from when you’re discussing costs with a VoIP service provider. We usually recommend that you ask your new provider things like how long are warranties good for, what type of support is offered after warranties expire, what sort of on-site and remote support is included with you package, etc.

The hidden fees & costs of VoIP phone service is usually easy to sift through.

Sure, the first time you see these “hidden fees” your eyes might bug out and you could wonder where the heck these additional costs are coming from, but when you get down to it, it’s fairly easy to figure out where these fees are coming from. To learn more about what hidden costs you can expect to see on your next VoIP bill and what you’re really paying for, feel free to contact us online, call me at 908-378-1217, or send me an e-mail directly at damon@tele-datasolutions.com.

By Damon Finaldi
President, Tele-Data Solutions
E-mail: damon@tele-datasolutions.com | Direct Line: (908) 378-1217
I’m the general manager at Tele-Data Solutions. I love helping my customers and creating the best working environment for my team members to grow and to thrive. I grew up with the telecom business and have seen the evolution of phones—from the analog world to IP—and the huge positive impact it can have on a business.